How should a multifamily office coordinate restricted stock, options, and other executive compensation?
Treat equity compensation as one household balance-sheet decision. Maintain a grant and vesting calendar, track tax and liquidity dates, manage company-stock concentration, and coordinate trading with securities-law restrictions. Review the plan whenever employment, ownership, liquidity, or family goals change. Use qualified legal, tax, and investment professionals for personal advice.
Build one compensation inventory
Start with a complete inventory for each executive and spouse. Record restricted stock, restricted stock units, incentive stock options, nonqualified options, deferred compensation, performance awards, and company shares already held. Capture grant dates, vesting rules, expiration dates, strike prices, settlement terms, withholding methods, blackout periods, and any post-employment exercise window.
Keep the inventory in a shared family-office system. Update it after every grant, vesting event, exercise, sale, job change, or corporate transaction. The company’s proxy statement and annual report can provide public information about executive compensation arrangements. Investor.gov identifies these filings as key sources for compensation information. Investor.gov
Coordinate tax and liquidity decisions
Separate three decisions: when an award becomes taxable, when shares can be sold, and how much cash the household needs. The timing differs by award type. The IRS states that nonstatutory options without a readily determinable value generally create income when exercised, measured by the stock’s fair market value less the exercise price. IRS
Before an exercise or vesting date, model withholding, estimated payments, charitable gifts, debt reduction, and cash reserves. Keep records of basis and holding periods. Avoid allowing a tax bill to force an unwanted sale during a blackout or market decline. A written liquidity schedule helps the investment team know when cash may be needed and helps the tax team review reporting deadlines.
Most people have an accounting firm, but many people complain and it's a weakness in their organization not having updated balance sheets, not having proper accounting and reporting, not having proactive tax planning advice.
Control concentration and trading restrictions
Company equity links employment income, human capital, and investment wealth to one issuer. Set a household exposure range and a selling plan that reflects goals, risk capacity, insider status, and trading windows. Use staged sales when appropriate, while recognizing that restricted shares may require additional transfer or registration steps.
SEC Rule 144 describes conditions for public resale of restricted and control securities, including holding periods, volume limits, and manner-of-sale requirements. Affiliates may also need to file Form 144 for sales above specified thresholds. SEC
Coordinate every trade with the employer’s compliance process and securities counsel. Keep written approvals, 10b5-1 plan terms, transfer restrictions, and blackout dates in the family-office record. Review the plan after a promotion, departure, IPO, acquisition, divorce, inheritance, or major change in family spending.
Related guides
- Access to Alternatives Through an MFO: A Practical Guide for Families
- Cross-Border Families and Multifamily Offices: A Practical Guide
- Family Governance With a Multifamily Office